Losing your job can be stressful, and, among other concerns, it can make it more challenging to make your mortgage payments while you search for a new job. The good news is there are ways to handle your mortgage that can help prevent mortgage default.
6 Tips for handling your mortgage after a job loss
You can handle your mortgage after a job loss by reviewing your mortgage insurance policy, notifying your lender of your situation, and determining your government assistance options, among other useful tips that are discussed in detail below.
Understand your insurance coverage
Some mortgage insurance policies include involuntary unemployment insurance coverages in which the provider will cover the cost of your mortgage payments, taxes, and home insurance payments. Of course, limits to how much they will cover and the amount of time they cover the costs will apply, and unemployment insurance is not offered by every mortgage insurance company.
Notify your lender that you are between jobs
Many lenders will provide forbearance for mortgage owners that have lost their job. Forbearance refers to pausing or reducing mortgage payments for a limited time while the homeowner improves upon their financial situation. Of course, this may not always be an option or may come with certain stipulations.
Learn about your government assistance options
If your mortgage insurance is insured by a government agency, then you may qualify for mortgage assistance through a government program. Notable government assistance programs that may help include the Federal Housing Administration (FHA), Fannie Mae, Freddie Mac, Veterans Affairs (VA), and the U.S. Department of Agriculture (USDA).
Temporarily cut your costs in other areas
Of course, some adjustments to your regular spending are likely in order. It is important to go through your finances and find ways to cut your spending. This may involve getting creative with food purchases, canceling subscriptions that are not necessary, and only paying minimum amounts on credit cards until you gain employment.
Dip into savings and avoid taking loans (if possible)
It is always encouraged to prepare for difficult times by saving money. This can avoid the need to ever borrow money from a loved one or take out a loan. If you have a savings accounts, then do not be afraid to use it. After all, this is exactly what it is for. Of course, it is best to avoid taking too much from any important savings account such as college savings accounts. While hosting a yard sale may not be a bad idea, it is best to find alternatives to selling items with sentimental value.
Worst case scenario: consider a short sale or bankruptcy
The housing market is generous for sellers right now. If all else fails, then considering a home sale may be an option for you. Of course, you should not feel forced to sell your home and do not have housing accommodations available to you after the short sale. While bankruptcy should be avoided if at all possible, it may be a better solution than having your home go into default.
EXIT Realty Bob Lamb & Associates is Murfreesboro’s most innovative real estate team.
EXIT Realty Bob Lamb & Associates
2630 Memorial Blvd, Murfreesboro, TN 37129